FHA Announces New Loan Limits to Take Effect October 1st

by Vanessa Linn on September 26, 2011

 

On October 1, 2011, the Federal Housing Administration (FHA) will implement new single-family loan limits as specified by the Housing and Economic Recovery Act of 2008 (HERA).  As a result, FHA will reduce loan limits in the highest cost metropolitan areas of the country while limits would remain unchanged in most other parts of the nation.

These new loan limits were scheduled to take effect in January of 2009, but continuing strains in credit markets led the Congress to delay implementation. The result has been nearly three years of higher loan limits for some areas based on the Economic Stimulus Act of 2008 (ESA).

The conventional home loan limit will remain at $417,000 nationally and the high balance limit will be lowered to $546,250 in San Diego County.  So, buyers can still buy a home up to $566,000  with 3.5% down, those intending to put 20% down can stay within the limit on a purchase up to $682,000. Rates remain historically low, so it remains a great time to purchase.

For those with eligibility, VA loan limits for 100% financing remain at $537,500. Higher loan amounts up to $1,000,000 maximum guarantee are available with graduated down payments.

For higher dollar purchases, this move will encourage more banks and investors to get back into the mortgage business. As the government moves out of the space above $546,250, private money will begin to fill the void.  Down payment requirements may be higher, but rates are still very reasonable and more programs are now available for self-employed and high net worth clients.

Visit our web site for information about all San Diego area new homes by Shea Homes.

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